Seattle Children’s argues in favor of rulings by embattled OIC judge

Seattle Children’s hospital on Tuesday made another move in the high-profile legal tussle over which facilities and doctors must be included in insurance plan networks in order to adequately protect customers.

The case — already significant because of the importance of the network adequacy debate — became even more controversial following allegations that the judge overseeing the dispute has been unfairly influenced. The allegations came from the judge herself, Patricia Petersen, chief presiding officer at the Office of the Insurance Commissioner.

The controversy started last summer, when the OIC approved insurance plans to be sold in Washington’s health insurance marketplace. Those plans included ones that did not have Seattle Children’s in their coverage. In response, the hospital demanded a hearing with OIC, arguing that the plans are inadequate for failing to include their facility because of the unique services provided there.

There has not been a hearing yet, but from December to early May, Petersen has issued orders concerning the case.

In May, Petersen filed a whistle-blower complaint with the state alleging that since September, another OIC employee had tried to influence her rulings in a number of hearings, including the case concerning Seattle Children’s and two insurance companies, Premera Blue Cross and BridgeSpan Health. Petersen claimed that Chief Deputy Insurance Commissioner James Odiorne had engaged in illegal “ex parte” communication, meaning he spoke with her about a case without all parties involved being able to participate, and that he threatened her job if she didn’t rule the way the OIC wanted.

A day after filing her complaint, Petersen was placed on leave by Insurance Commissioner Mike Kreidler, who says that Petersen was not inappropriately influenced and that her suspension was due to separate personnel issues.

The story took an unexpected twist when Petersen admitted to anonymously emailing her whistle-blower complaint to an attorney with Seattle Children’s, which could constitute the sort of illegal communication of which she had accused Odiorne. Petersen said she emailed the complaint accidentally.

The OIC has hired an independent investigator to look into the situation and it assigned a new judge, technically called an administrative hearing officer, to preside over the case with Seattle Children’s and the insurance companies. The state auditor declined to investigate Petersen’s complaint.

Last week the insurance companies asked the OIC to chuck out her decisions, stating “Judge Petersen’s orders are tainted by her appearance of impartiality and must be vacated as a matter of law.”

Tuesday, attorneys for Seattle Children’s shot back, asking the OIC to uphold Petersen’s orders. They argue that the orders are not final and that Premera and BridgeSpan failed to make specific arguments explaining why the decisions are invalid.

Earlier this week, state senators convened a work session in which they considered whether hearings at the OIC, in their current format, are being conducted in a fair manner. Petersen was among those testifying.

About the blog

HealthCare Checkup is a new blog dedicated to helping readers understand the Affordable Care Act and how the federal health-care law affects everyone – insured or not. Reporters in Seattle, Olympia, and Washington, D.C. contribute. The editors are Beth Kaiman and Mark Watanabe.

The blog is produced through a partnership with Kaiser Health News, an editorially independent part of the Kaiser Family Foundation, a health policy research and communication organization that is not affiliated with Kaiser Permanente.